Problems

The following items were selected from among the transactions completed by Sherwood Co$.$ during the current year:

June $1.$ Borrowed $$400,000$ from Triple Creek Bank, issuing a $45-$day, $5\%$ note.

July $1.$ Purchased tools by issuing a $$45,000,60-$day note to Poulin Co$.,$ which discounted the note at the rate of $7\%$

July $16.$ Paid Triple Creek Bank the interest due on the note of June $1$ and renewed the loan by issuing a new $30-$day, $6\%$ note for $$400,000.($Journalize both the debit and credit to the notes payable account.$)$

Aug $15.$ Paid Triple Creek Bank the amount due on the note of July $16.$

Aug $30.$ Paid Poulin Co$.$ the amount due on the note of July $1.$

Dec $1.$ Purchased equipment from Greenwood Co$.$ for $$260,000,$ paying $$40,000$ cash and issuing a series of ten $9\%$ notes for $$22,000$ each, coming due at $30-$day intervals.

Dec $31.$ Paid the amount due to Greenwood Co$.$ on the first note in the series issued on December $1.$

Problem $1$ Instructions:

a$.$ Journalize each transaction.

b$.$ Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:

i$.$ Product warranty cost, $$80,000.$

ii$.$ Interest on the nine remaining notes owed to Greenwood Co$.$